Having a savings account is something that seems necessary in 2022. In case of unexpected expenses and peace of mind, it is nice to have a little money set aside, but a lot of Americans struggle to save money every paycheck, and the thought of saving can be a daunting one.
How you save and what you save every paycheck or every month depends on your personal financial situation. There is no one-size-fits-all savings plan, but we can all agree that saving what you can is important to set you up for what life might throw your way. With inflation hitting a 40-year high,¹ it has become even harder for Americans to set aside money every month. Monthly expenses on things such as food, gas, and rent have skyrocketed, leaving Americans spending more and seeing that impact at the end of the month.
Our article will walk you through the average savings account balance for Americans, savings by demographics, and much more.
5 Quick Statistics on Savings Accounts
- 51% of Americans say they have $5,000 or less in their savings account.²
- 35% of Americans say they have $1,000 or less in their savings account.²
- 59% of American adults have 3 months of emergency savings.³
- 54% of parents with children under the age of 18 have 3 months of emergency savings.³
- 12% of all adults said they could not pay a $400 unexpected expense.⁴
What Are Savings?
According to Investopedia, savings refers to the money that a person has left over after they subtract out their consumer spending from their disposable income over a time period. Savings, therefore, represents a net surplus of funds for an individual or household after all expenses and obligations have been paid.
The Average Savings Account Balance in the U.S.
While you might look at your bank account and think you don’t have a lot saved, it might make you feel better to know you are not alone. According to survey data from The Ascent, the mean (average) savings balance among Americans is $35,366. The median (middle value: more representative than an average), however, is $4,500.²
Although, when you break down the data from the survey, the most common response to “How much money is in your savings account?” was $1,000 to $5,000. 51% of Americans admit to having $5,000 or less in savings, and 35% say they have $1,000 or less.²
The data from the Ascent survey doesn’t vary much from the latest consumer finance survey from the Federal Reserve. The Survey of Consumer Finances says the average balance in checking, savings, and other “transaction accounts” in the U.S. was $41,600 in 2019. The median balance was $5,300.
Savings by Demographics
In the Federal Reserve’s “Report on Economic Well-Being of U.S. Households,” 59% of adults have 3 months of emergency savings.³
When reviewing the data by education, race/ethnicity, and parental status, the percentages all stay in the 50% to 70% range.
Based on the 2021 report, education-wise, 76% of adults with a bachelor’s degree or higher have 3 months of emergency savings, while just 48% of adults with a high school degree or GED have the same savings.
By race/ethnicity, 69% of Asian adults have 3 months of emergency savings, compared to 44% of Black adults.
Fewer parents living with their own children under the age of 18 (54%) have up to 3 months of emergency savings, compared to 61% of all other adults.
According to the Federal Reserve’s “Report on Economic Well-Being of U.S. Households,” in November 2020, when faced with a hypothetical unexpected expense of $400, 12% of all adults said they would be unable to pay the expense by any means.⁴
Another survey by Bankrate.com found that only about 4 in 10 Americans have enough savings to cover an unplanned expense of $1,000, meaning more than half would need to find other means to pay for an unexpected car repair or emergency room visit.⁵
When survey takers were asked how they would pay for a $1,000 unexpected expense, 20% said they would charge it to a credit card and pay it back over time.⁵
How Much Should I Have in Savings?
So how much money should you have in savings? There is no right or wrong answer here, as everyone has a different financial situation, but there are a few popular theories.
The one you have most likely heard is that you should have enough money in savings to cover 3 to 6 months of basic expenses, but exactly how much that is depends on your personal lifestyle.
A great way to find out how much you should save every month is to sit down and figure out all your monthly bills and expenses. You should look at how much money you bring in every month after taxes, and figure out after all your bills are paid, how much can you put into a savings account.
4 Popular Types of Savings Accounts
Traditional savings accounts can be opened at your bank or credit union with a low minimum deposit. This type of savings account allows you to earn interest on your money, but not as much as you would with other forms of savings accounts.
High-yield savings accounts are a great way to earn interest on your money. You can find high-yield accounts at online banks and credit unions.
Money market savings accounts are a great option for people who want to earn a higher interest rate than a traditional savings account, but also want to have an option to access their money. Essentially, a money market account acts as a regular savings account, but with the benefits of a checking account. You can open a money market account in person or online at a bank or credit union.
Certificate of Deposit (CD)
If you will not need access to the money in your account, a CD account could be a good option for you. This type of account allows you to deposit money and agree to leave it in the account for a period of time. During that time, your money will earn a competitive rate. The terms on CD accounts typically range from a month to as long as 60 months. Longer terms usually result in a higher rate.
Whether you are in the beginning stages of your savings journey or a seasoned saver, it’s always good to keep an eye on different ways to build on the money you have saved up, look into different accounts, and monitor the market. Continue to save what you can every month and remember, no financial situation is the same, but it’s always good to have a little extra money on a rainy day.
¹ Rushe, D. (2022, June 10). US inflation hits 40-year high of 8.6% as food, gas and shelter costs rise. The Guardian. https://www.theguardian.com/business/2022/jun/10/us-inflation-rate-may-2022-four-decade-high/
² Backman, M. (2022, May 9). Study: Average American’s Savings Account Balance is $4,500. The Ascent. https://www.fool.com/the-ascent/research/average-savings-account-balance/
³ The Federal Reserve (2022, May 23). Report on the Economic Well-Being of U.S. Households. https://www.federalreserve.gov/consumerscommunities/sheddataviz/emergency-savings-table.html
⁴ The Federal Reserve (2022, May 23). Report on the Economic Well-Being of U.S. Households. https://www.federalreserve.gov/consumerscommunities/sheddataviz/unexpectedexpenses-table.html
⁵ Bennett, K. (2022, January 19). Survey: Less than half of Americans have savings to cover a $1,000 surprise expense. Bankrate. https://www.bankrate.com/banking/savings/financial-security-january-2022/